Invested Capital: Definition And Formulae

Invested capital equals the sum of all cash that has been invested in a company over its life without regard to financing form or accounting name. It is the total of investments in the business from which operating revenue is derived. It can be calculated two mathematically equivalent ways as shown in Figure 1.

Average Invested Capital is the average of beginning and ending invested capital. If the company discloses the purchase price and closing date of an acquisition, we weight the acquired invested capital by the percent of the fiscal year the acquisition was held.

When David on CNBC asked you about detailing your calculations of ROIC, your answer was “it’s all transparent and detailed very clearly on my website blog [above?].

I find this anything BUT transparent. The details of your calculation are totally worthless. Evey your general description is, in itself, very vague. Can you perhaps show your calculations to arrive at Apple’s ROIC of 340%?

You said see the model in my prior reply comment. I didn’t see a response to Tom McConnell’s comment above. I verified that for both NOPAT and Investing images browsers cannot open http://www.newconstructs.llc

Steve Caple:
Thank you for your comment.
My ROICs tend to be different than everyone’s because my models incorporate more data, especially from the financial footnotes. New Constructs specializes in providing the cleanest and most accurate ROICs on US stock in the market.
Some of our biggest clients are highly sophisticated quant funds that are super-snobs when it comes to data. More info on importance of footnotes is here: http://www.newconstructs.com/2010/05/13/rule-1-for-finance/

Here is my response to Tim McConnell’s comment:
The link below shows my calculations and data values behind $283 share price implied by he 70% ROIC and behind the $240 share price implied by 50% ROIC.
The link is to a file showing my model, which I think is the most transparent way to explain my calculations.